Friday, July 26, 2013, 11:38 AM

Fights That Matter: Local Government and State Tangle Over Ownership and Control of an Airport

A very interesting battle is going on in the
western part of the State between a local government and the powers in Raleigh over the ownership and control of the Charlotte Douglas International Airport, reportedly the 6th-busiest airport (traffic)/23rd-busiest airport (passengers) in the world.

Some view the fight as between the reach of
local governments and the reach of the State, others view the fight as between
political parties, some view it as between a pro-government and
pro-public/private partnership camps, while still others view it as between
business interests.

"It's a 13 member commission comprised of various individuals appointed by myriad government bodies and other things. But that's not important right now."

The story is as follows.

The First Law.

In mid-July, the General Assembly adoptedSession Law 2013-272, which created the
Charlotte Douglas International Airport Authority, defined by the Session Law
to be "a body corporate and politic, having the powers, authority, and
jurisdiction hereinafter enumerated and such other and additional powers
and authority as shall be conferred upon it by future acts of the General
Assembly". The Authority would consist of 11 members appointed from
various "pools".

But the creation of the Authority is not, in
itself, what ruffled feathers. Session Law 2013-272 transferredfromthe City of
Charlottetothe
newly-created Charlotte Douglas International Airport Authority "[a]ll
right, title, and interest of the City of Charlotte in and to the Airport
Property, Airport Facilities, and Charlotte Douglas International Airport ...
as a matter of law when this act becomes law."

This transfer of ownership upset the City.

The Lawsuit.

On July 13, five days before the Session Law
took effect, the City of Charlottefiled a lawsuit in State court against
the State and the Authority (the latter did not yet exist, technically) to
restrain the enforcement of the Act, including (or, specifically) the transfer
of the Airport's ownership to the Authority.

The Lawsuit claimed four bases for stopping
the transfer of ownership: (1) the Session Law is a local act prohibited by the
North Carolina Constitution, (2) the transfer of ownership will trigger a
default of municipal bonds used to fund the Airport, (3) the Session Law is
inconsistent with federal law governing the "certification and licensing
of airports", and (4) the transfer of ownership is not a valid exercise of
the eminent domain powers, and, if it is a valid exercise, it is one without
the payment of just compensation.

The Temporary Restraining Order.

On July 18, the Court entereda Temporary Restraining Orderin the City's favor and against the
State and the Authority preventing the State "from taking any action to
implement or enforce the Act" and preventing the transfer of the Airport's
ownership. The Court extended the Order through July 29, at which point
it would hear the parties in full on a preliminary injunction.

So, everyone is paused until we can determine
whether this should be paused.

Notably, in issuing the Order, the Court
scribbled out the City's likelihood of success on points (2) and (3) from
above, signaling that the Court is, at first blush, more convinced of the
City's arguments (1) and (4).

The Second Law.

On July 25, in response to the lawsuit
and the TRO, the State Senate substituted Senate Bill 380, which had been
introduced back in March to address sanitary landfill fees, with a Second Bill
that would repeal the First Bill and ostensibly remove the need for (or at
least moot) the lawsuit. We don't know enough about the rules of the General
Assembly to know why a bill was substituted in entirety, rather than a new bill
introduced, but we can guess: speed.

According to reports, the Second Law -- which
repeals the First Law -- is different in that (1) the airport would stay a city asset, and (2) bonds would stay with the
city too, avoiding a switch mandated by the authority bill that the city
highlighted as a problem when it filed a lawsuit. But the Second Law
still takes away control of the Airport from the City, in that operations and
finances would be run by a new 13-member commission.

What's Next?

According to reports, the City is not
satisfied with the Second Law, either. The lawsuit will need to be
amended, but we can be sure the fight is not over. What we can glean is that neither side really wants to litigate.Mike Thelen practices in Womble, Carlyle's Real Estate Litigation and Land Use practice group. He regularly represents a wide variety of clients, from local governments to businesses, in land use and land development matters in both state and federal venues throughout North Carolina. Follow the North Carolina Land Use Litigator on Twitter at @nclanduselaw.